Bullions Tips - Gold futures ended on a blustering note in the domestic market on Friday as investors and speculators exited positions in the precious metal tracking weakness in the yellow metal in the overseas market where Gold prices dipped to the lowest level since February 2010 as speculation that the US Federal Reserve will hike interest rates for the first time in almost a decade, in December, curbed the bullion’s appeal as a store of value.
Gold, a non-interest bearing asset loses its sheen during a rising interest rate scenario.
Minutes from the US Fed’s latest meet, released last week, showed that most policymakers thought it may be appropriate to raise borrowing costs next month.
The President of the Federal Reserve Bank of St. Louis, James Bullard signaled the possibility of an imminent rate hike while Fed Vice Chairman Stanley Fisher told that policymakers done everything they could to prepare markets for a first rate hike since 2006.
A stronger dollar also curbed the lure for Gold as an alternative asset. Stronger dollar makes Gold more expensive for those holding other currencies, thus Blur demand.
However, speculation that the European Central Bank (ECB) may undertake additional monetary easing next month either by cutting its deposit rate or by boosting its bond buying program, or both, trimmed losses in Gold, a hedge against the inflationary risk of monetary stimulus.
Gold may trade on a cautious note today amidst key US data including manufacturing PMI and existing home sales.
At the MCX, Gold futures for December 2015 contract closed at Rs 25,243 per 10 gram, down by 0.19 per cent after opening at Rs 25,361, against the previous closing price of Rs 25,291. It touched the intra-day low of Rs 25,200.
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